PS3 delays, burning batteries undermine Sony profits

Giant slashes full-year earnings forecast

Sony has slashed its annual earnings forecast by 38 per cent. The consumer electronics giant blamed the cut on its worldwide laptop battery recall, the need to reduce the launch price of the PlayStation 3 in Japan and delay its European release, and below-expectations sales of the PlayStation Portable.

The upshot? Sony will post a net income of around ¥80bn ($671.8m/£359.7m/€536.7m) for the year to the end of the March 2007, down from the ¥130bn ($1.09bn/£584.5m/€872.2m). Operating income will fall 62 per cent it added.

Sony said it was putting aside ¥51bn ($428.3m/£229.3m/€342.2m) to cover the cost of replacing all the laptop batteries recalled by Dell, Apple, Lenovo, Toshiba, Hitachi, Sharp and Sony itself over the past few months.

Meanwhile, "a decrease in sales and an increase in operating loss are expected within the Game segment as a result of the reduction of the retail price of PS3 hardware in Japan and the fact that sales and profitability from the PSP business are expected to be lower than originally forecast," the company said in a statement.

The company's electronics division will also suffer a knock-on effect because the games division isn't buying as many chips as its original PS3 roll-out plan forecast, Sony warned.